The state of US Sport Betting two years after the legalisation process
Over 2 years have passed since May 2018 when Paspa (Professional and Amateur Sports Protection Act), which prohibited Sport Betting in the US, was repealed by the United States Supreme Court, paving the way for individual states to introduce legislation permitting Sport Betting.
by Ludovico Calvi
Sport Betting market in the US since then has been completely transformed leading to 18 US States plus the Federal District offering fully fledged betting services while 4 more States have authorised Sport Betting but are not fully operational yet.
The original policy intent of Paspa was to preserve sports integrity. The prevailing view, with the benefit of hindsight, is that Paspa ended up achieving just the opposite of its intended purpose and fostered a massive black or grey market which was allowed to proliferate behind the thin veil of legitimacy.
During the pandemic, unregulated bookmakers continued to take advantage of unknowing consumers and the situation worsened with the cessation of mainstream US sport competitions. However, with the resumption of US sport leagues such as Nba, Mlb and Nhl and with the Nfl starting, with contingency plans, on September 10th , the US regulated Sport betting market has continued to grow.
The legalisation process did not initially have any impact on the massive black market created in over 25 years of Paspa but the perception of US sport bettors vs non licensed betting operators is beginning to change.
A new sport betting consumer survey commissioned by the American Gaming Association (Aga), which took place between December 2019 and January 2020 including 3,451 interviews among American adults over 21-years-old, in fact, shows that the fight against illegal sports betting operators is beginning to favour the newly legalized market, with consumers preferring legal options to illegal bookmakers.
Americans have legally placed bets worth more than $22 billion on sports nationwide since the Supreme Court overturned PASPA, generating more than $198 million in tax revenue to state and local governments.
According to the research, average spending with illegal bookmakers fell 25% in legal sports betting states last year, while legal online and mobile betting spend increased by 12%.
The study found that illegal sports betting is driven largely by confusion about online operators, more than half of the bettors who placed most of their bets with illegal operators believed they were betting legally and this tells a lot about the need to inform consumers effectively by regulators and licensed operators. Some consumers believe that if a State has regulated sports betting, they are allowed to place wagers with whoever offers them the opportunity to lay a bet. There is still a lot to do to improve the perception of the consumers about what is a legal and illegal betting offer and what are the consequences and the differences.
The main priorities for regulating bodies should be, on the one hand to create sustainable market conditions (regulated mobile betting and competitive betting offer and pricing), to compete against illegal operators, which would motivate bettors to switch to legal options, and on the other to educate customers on how to bet legally and the dangers of the illegal market, especially with the US sport leagues back in action.
According to the survey, legal sports betting is available to 22,4 M more American adults than before the Covid-19 pandemic.
In this respect the American Gaming Association has been very active in supporting the process of migration from illegal to legal sport betting through an interactive sports betting map including a comprehensive directory of licensed online and retail sportsbooks in states where sports betting is legal. In addition, the Aga is actively collaborating with federal and state law enforcement to enhance collective understanding of the illegal market dynamics, engaging publishers and media to ensure their media platforms do not promote illegal betting operators.
As US states continue to consider legalizing sports betting, it is imperative that they create the regulatory conditions for a sustainable long-term market growth within a given State, while fighting black market and offshore operators effectively.
Unfortunately there are states where policymakers and regulators have been unable to create sustainable regulatory and fiscal conditions, and the sport betting market has turned out to be not attractive for both consumers and gaming operators, who will no doubt choose to turn away from an opportunity deemed economically non-viable. In these cases, the black market and offshore operators are likely to continue to expand their businesses outside unfettered by integrity measures and standards of consumer protection.